As the northern Colorado housing market continues to offer limited opportunities, some buyers are turning to new construction.

Where do you start?

Before visiting model homes, your first step is to meet with a lender to determine the purchase price and loan amount for which you qualify. While many builders offer allowances for closing costs or design upgrades in exchange for working with their preferred lenders, the choice of lenders is yours.

Time to shop!

It’s fun to visit model homes! Focus on new home neighborhoods that fit your approved price range and preferred location. When you visit a model home, you will be talking with a sales associate that represents the builder. Some builders require that you be accompanied by your agent to assist you in the purchase process .

Model homes are built to WOW! Upgrades add to the cost of the home so you’ll want to know what materials and fixtures are standard.

Neighborhood details vary. How large are the lots and is fencing allowed? Is there a Homeowner’s Association? What are the amenities such as walking trails or parks? What are the neighborhood schools? Are future developments planned for the surrounding area?

Who is your builder?

Learn about the builder’s qualifications. Talk to current homeowners about their experience and search online for reviews and news articles.

Write a contract!

The builder’s sales rep will complete the contract with you, which is different from the contract used for the sale of an existing home. If applicable, you will also discuss the time frame for listing and selling your present home.

Construction begins!

Your new home may take a few months to complete, if it’s already under construction, or 6-8 months for a home that is not yet started. You will have opportunities to visit your new home while it’s built.

The finish line!

The last few weeks before closing are a busy time! Your lender will update and finalize your loan approval and determine the amount of cash you need for closing. An independent inspection of your home might be done. Before closing, you will walk through the home with the builder to review the operating systems, the home warranty, and check for any minor items that need attention.

Moving day!

Finally, closing documents are signed, and you have the keys to your new home! If your dream home is a custom build, that’s yet another process.

Buying a new construction home is a bit different than purchasing a resale home — one that’s been previously owned by someone else. You’ll need to be familiar with a few tricks of the trade, along with understanding a bit about how the process works.

1. Use your own Broker/Agent.

ALWAYS use your own RE/MAX Advanced Broker/Agent; doing so will help ensure that you get what you want. Understand that the sales reps you meet at new construction communities are likely representatives of the Seller — the builder, corporate owners, developers, whomever — they are there to present their product, answer your questions … and do the best job for the Seller.

2. Don’t expect price reductions.

Yes, it does happen. But overall, remember that builders have established a set of prices that they feel best make their product (the houses) marketable with an expected profit margin. Furthermore, lowering the price on a house drops the comparable value of other houses in the community, thus bringing the entire suite of houses down in price.

3. Look instead for builder concessions in the form of additional upgrades.

Rather than price reductions, you may be able to gain a few upgrades from the builder at no cost, or for less money. Perhaps the builder would be willing to include a fence, landscaping, upgraded carpeting, or appliances as part of your purchase without charging you extra.

4. Builder incentives in the form of interest rates, etc., may not be coming from the builder.

Lots of new communities boast incentive programs that cite things like “3.75% financing for 30 years” or “Zero Closing Costs.” What’s important to know is that the builder may not be the one actually paying those closing costs, or reducing the interest rates. Typically, those types of incentives are coming from the builder’s preferred lender who is counting on a sufficient number of loan transactions in order to recoup the cost of the incentives.

5. Expect to use the builder contract or addendum.

In almost every case, new construction homes require the use of a builder’s contract or at least a lengthy addendum in addition to the typical purchase forms used by a Broker/Agent. Generally builder forms include language specific to the terms of the building process and can be many pages long, full of tightly packed terms. While much of the language is common sense, be sure to read the contract thoroughly yourself (as will your Broker/Agent) and then consult with a qualified real estate attorney if you have questions or concerns. Agents, even those sales reps for the seller, aren’t allowed to (and shouldn’t) attempt to advise you or interpret what those custom forms really say.

6. Builder warranties vary.

Not all builder warranties are the same. Some builders warrant their work from top to bottom for several years, some only for one. Many builders will offer a warranty of up to about 10 years for structural-type issues, with other warranty time frames for things like plumbing leaks. In addition, you’ll find that your new home will likely
have individual warranties for appliances, roofs, windows, etc. Be sure to carefully review the warranty offered by the builder of your desired home before signing the final contract for your new home purchase.

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